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posted at July 19, 2013 7:03 AM EDT
Re: Reverse mortgage
posted at July 19, 2013 11:35 AM EDT
First: November 27, 2011
Last: March 7, 2014
In Response to Reverse mortgage:
My mother-in-law (90) may be moving out of her house, meaning (in this case) that it would need to be sold to pay off her reverse mortgage. Value is probably less than the loan balance; federal insurance (funded, at least in part, by her monthly premiums) would in effect cover the difference. Obviously one must make a good faith effort to get the best price so as not to abuse the federal guarantee. But what is a good faith effort in a very slow housing market? Does anyone have experience with this situation? Thanks. J
Posted by jefmafnl
I will assume, from your description, that she has a HUD FHA Reverse Mortgage.
You can start your research on the HUD website and you will need to read her mortgage paperwork.
It is hard for me to believe that under this program that the home is underwater since she is only advanced an amount equal to a certain percent of her equity.
However, anything is possible in this crazy housing market.
From the HUD FHA Reverse Mortgage for Seniors:
"The only reverse mortgage insured by the U.S. Federal Government is called a Home Equity Conversion Mortgage or HECM, and is only available through an FHA approved lender."
Follow the links in the description of the product or contact a HUD approved counselor for any questions.
Generally, it works like this, I believe (from Wikipedia)
"When the loan comes due
The loan comes due when the borrower dies, sells the house, fails to keep the taxes or insurance current, or moves out of the house for more than 12 consecutive months. Once the mortgage comes due, the borrower or heirs of the estate have an option to refinance the home and keep it, sell the home and cash out any remaining equity, or turn the home over to the lender. Once a reverse mortgage is called due and payable, the borrower (or their heirs) can possibly be granted time extensions by the lender to give them up to one year to make this decision.
If the property is turned over to the lender, the borrower or the heirs have no more claim to the property or equity in the property.
The lender has recourse against the property, but not against the borrower personally and not against the borrower's heirs. Thus the mortgage is within the category known as "non-recourse limit".
Re: Reverse mortgage
posted at July 21, 2013 9:27 AM EDT
First: July 19, 2013
Last: July 21, 2013
In Response to Re: Reverse mortgage:
[QUOTE]In Response to Reverse mortgage : I will assume, from your description, that she has a HUD FHA Reverse Mortgage. You can start your research on the HUD website and you will need to read her mortgage paperwork. ...
Many thanks! I read the HUD manual at
and it's quite clear:
That the debt must be paid in full; or the property
must be sold for the lesser of the debt, including
shared appreciation, if any, or 95% of the appraised
value; or good marketable title to the property must be
deeded to the mortgagee.